Klarna Secures €1.7 Billion in Landmark Risk Transfer Deal

Klarna transfers €1.7B in credit risk via a major SRT deal, freeing capital for growth. This follows a $2B credit facility, enabling over $40B in lending despite profitability challenges.

In a major strategic financial maneuver, the buy-now-pay-later giant Klarna has successfully offloaded €1.7 billion in credit risk. This significant transaction is a core component of the company's ongoing effort to reshape its balance sheet, freeing up capital to aggressively expand its global lending operations.

Freeing Capital for Global Expansion

The deal is structured as a significant risk transfer (SRT). A consortium led by Värde Partners has agreed to assume the default risk for a substantial portfolio of euro-denominated consumer loans for a three-year period. For Klarna, the immediate benefit is a reduction in the regulatory capital it must hold against these loans. The capital unlocked by this move is being directly channeled into new growth initiatives and additional credit issuance. According to the company, this marks its sixth and largest SRT transaction to date.

This latest move is not an isolated event but part of a broader capital strategy. Just at the end of March, Klarna secured a separate $2 billion credit facility from Elliott Investment Management, specifically aimed at accelerating its U.S. business growth. Together, these two financial instruments create a foundation capable of supporting a total credit volume exceeding $40 billion.

Strong Revenue Growth Contrasts with Profitability Concerns

The push for expansion is backed by robust operational performance. Klarna's revenue surpassed the $1 billion mark for the first time in a single quarter during Q4 2025, fueled by remarkable 58% growth in the United States. For the full year, revenues climbed by a quarter to reach $3.5 billion.

However, profitability remains a persistent challenge that continues to weigh on investor sentiment. Both net and operating margins stayed in negative territory throughout the period. This lack of earnings momentum has had a severe impact on the company's market valuation. Since the start of the year, Klarna's share price has plummeted by approximately 53%, closing at just €11.46 on Wednesday.

The Path Forward

With its capital structure now optimized through these recent deals, Klarna has positioned itself for its next growth chapter. The framework for handling a significantly larger credit portfolio is firmly in place. The management's primary challenge now is to convert its powerful revenue growth—driven by its 118 million global customers—into sustainable and consistent profits.